2021 (10) TMI 298 - Tri - Insolvency and Bankruptcy

Condonation of delay of 56 days in filing application under section 9 of the Code - Section 5 of the Limitation Act, 1963 r/w. Section 238A of the Insolvency Bankruptcy Code, 2016 - Seeking permission to correct the date of default in Part-IV of Application under section 9 of the Insolvency Bankruptcy Code, 2016 - seeking amendment of original petition under Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT - As per Rule 20(c)(i), (iii) (iv), views expressed by a party in the course of the mediation/conciliation proceedings or the proposals made or views expressed by the mediator/conciliator and admission made by a party in the course of mediation/conciliation proceeding shall not rely on or introduce the said information in other proceedings. When we consider the case in hand then we notice that although the settlement agreement was arrived in between the parties and the matter was referred to the concerned court under Rule 25 of the Mediation Rules but the applicant has failed to produce any document to show that the concerned court has passed any order as required under Rule 25 of the Mediation Rules. Therefore, in view of the Rule 25 of the Mediation Rules, unless an order has been passed by the concerned court, the settlement arrived in between the parties before the Mediator cannot be treated as a decree. And in view of Rule 20 of the Mediation Rules, views expressed by a party in the course of the mediation/conciliation proceedings or the proposals made or views expressed by the mediator/conciliator and admission made by a party in the course of mediation/conciliation proceeding shall not rely on or introduce the said information in other proceedings. Application dismissed.

Issues Involved:
1. Amendment of the date of default in the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Condonation of delay in filing the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.

Issue-wise Detailed Analysis:

1. Amendment of the Date of Default:

The applicant sought to amend the date of default in the original petition IB-630/2020 from 10.01.2008 to 31.12.2016. The request was based on a Mediation Order dated 16.11.2015, which acknowledged the debt and proposed a repayment schedule through post-dated cheques, all of which were dishonored. The applicant argued that the Mediation Order and the dishonored cheques amounted to an acknowledgment of the debt under Section 25(3) of the Indian Contract Act, 1872.

The Tribunal, however, noted that the Mediation and Conciliation Rules, 2004, particularly Rule 20 and Rule 25, stipulated that any settlement agreement reached during mediation must be presented to the concerned court for it to pass a decree. The applicant failed to produce any document showing that the concerned court had passed an order as required under Rule 25. Consequently, the Tribunal held that the Mediation Order could not be treated as a decree, and the views expressed during mediation could not be introduced in other proceedings as per Rule 20.

Therefore, the Tribunal rejected the applicant's prayer to amend the date of default, concluding that the Mediation Order dated 16.11.2015 did not constitute a valid order or decree under the law.

2. Condonation of Delay:

The applicant sought condonation of a 56-day delay in filing the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, citing Section 5 of the Limitation Act, 1963. The applicant argued that the delay was due to a bona fide belief that serving a Demand Notice under Section 8 of the Code was sufficient compliance with the Law of Limitation and that the limitation period should be calculated from the receipt of the dishonored cheque return memo dated 31.12.2016.

The Tribunal examined the grounds for condonation of delay and the relevant legal provisions, including Section 18 of the Limitation Act, which requires an acknowledgment of debt to be in writing and made before the expiration of the prescribed period. The Tribunal found that the acknowledgment made during mediation on 16.11.2015 occurred after the expiration of the limitation period, which began on 10.01.2008, the original date of default.

Furthermore, the Tribunal held that the pendency of criminal proceedings could not be considered for exclusion under Section 12 of the Limitation Act, as it applies only to civil suits, appeals, or applications. The Tribunal also noted that the applicant failed to explain why no legal recourse was taken prior to the enactment of the Insolvency & Bankruptcy Code, 2016.

Consequently, the Tribunal found no sufficient cause to condone the delay and dismissed the application for condonation of delay.

Conclusion:

The Tribunal dismissed both applications. The request to amend the date of default was rejected because the Mediation Order did not constitute a valid decree, and the views expressed during mediation could not be introduced in other proceedings. The application for condonation of delay was also dismissed as the applicant failed to provide sufficient cause for the delay and the acknowledgment of debt was made after the expiration of the limitation period.

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